FROM THIS EPISODE

Up until recently, the record business was mildly interested in sales of CDs on the internet. But that--s all changed as we--ve just had a significant wake up call.

Want to know just how significant a wake up call can be these days? Singer/songwriter Dave Matthews, who released his solo CD at the end of September, sold a whopping eighty seven thousand copies in one week just solely the internet. That--s amazing, considering that most CD sales on the internet run about 500 to 3000 pieces for the debut week. But in this case, 87,000 CDs will gross about over a million dollars and that--s just one week of sales on the internet.

Dave Matthews is old hand at this new paradigm of marketing on the web. His website is a virtual community of music lovers and active fans, networking together. If you pre-ordered the new CD through the band--s website, at $13.00 a pop, you would have also received a 7 song live bonus disc, plus a Dave Matthews sticker, and an opportunity to enter to win an autographed prize. Value added elements are becoming the norm in the music business to help secure sales in a declining market.

To add to the build up of the release, Dave Matthews joined forces with AOL for with a free concert in Central Park that was broadcast nationally, to benefit New York City Schools. The concert took place during the week of the album--s release and it was impossible to be in NYC last month without seeing something about Dave in the press, on the trains, or in the street. The same was true on AOL.

By joining forces with an internet media giant for the greater good of the community, coupled with a massively active website fan base, plus the release of a low priced CD, with value add ons as well, these are the ingredients for breakthrough success. Watch and you--ll see others attempt to replicate that formula in the coming months.

But there--s something even more interesting about the Dave Matthews situation. If you go onto his website, you--ll find that Dave and the band want to turn you on to other great music. In fact, Dave has links to over 30 other artists he--s either performed with or admired. And because his influence is so great, he can really guide fans to another level of awareness of music. Think Ophra Winfrey.

I used to have musical guides. 30 years ago, my musical guidance counselors were friends at school, 25 years ago, it was Rolling Stone, and 15 years ago I watched my MTV. But those days are gone. If I don--t live in LA, and I--m not listening to KCRW, who--s going to introduce me to new great music?

The music business has oversaturated the market with new music without properly introducing it. There are over 3,000 records released a month in the United States. Commercial radio stations barely scratch the surface with 40 or less new songs added each week. MTV & VH1 have even more restrictive programming. Walk into any Tower or Virgin records, and you--re bound to be overwhelmed with endcaps brimming with new music that is rotated daily.

At the current rate of production, with our limited means of exposure, there--s no good way for anyone to keep up with new music. That is, until the internet came along. It--s targeted, inexpensive, voluntary and meets the consumer wherever they like to hang on the net. And if you trust your guides, you--ve got a continual advisor 24/7 at your fingertips. What more could you want as a marketer?

Record companies are finally waking up to an understanding that some bands have known for a long time. That the internet provides the perfect marketing delivery systems to reach their core audiences. It can build their audiences into strong and vital word of mouth communities. It can sell a hell of a lot of records and merchandise. Now that labels are beginning to see economic results from the internet, watch them invest more and more into this vital resource. May we all be richer for the experience.